Big FCI rice stocks in Punjab evaporate

The latest report of the Comptroller and Auditor General of India (CAG) reveals FCI has been showing in its books that it has been losing as much as 1.02 per cent of its rice stocks every year in Punjab due to "loss of moisture".

The CAG audit has found that while neighbouring Haryana has a similar climate the average loss in the weight of FCI's rice stocks attributed to the loss of moisture is only 0.33 per cent in the state. This works out to less than one- third of the loss that FCI officials in Punjab have been showing.

The audit report observes "when compared with the Haryana region, excess storage losses of 3.23 lakh metric tonnes valued at Rs 450.7 crore was observed for the period 2003-04 to 2007-08 in the Punjab region". This works out to over Rs 100 crore a year during these four years.

"No reasons were available on record for this wide variation in percentage loss in the two neighbouring regions. Misappropriation of stocks cannot be ruled out in high percentage of storage loss," the CAG report concludes.

FCI's explanation for the higher storage loss in Punjab was that " there was more procurement" in the state than in Haryana. This reply to the CAG's query on the issue was also endorsed by the food ministry.

However, the CAG report states, "This reply is not acceptable. Higher procurement does not imply a higher percentage of storage loss. Further, though the climatic conditions in both the regions are similar there is a difference of nearly 200 per cent in the storage loss in the two regions." A senior CAG official said, "The audit report is very clear on the issue. Now it is for the government to decide how the matter has to be investigated further."

"Haryana, in fact, was carved out of Punjab and the geo- climatic conditions of the ricegrowing regions in the two states are very similar if not identical," a senior ICAR scientist told MaiL Today. The CAG report also points out that the government of India had issued instructions as far back as 1980 directing FCI to fix the limits of storage loss on account of loss in weight and deterioration of stocks by September 30, 1980.

FCI's storage and contract manual also lays down that the area manager should fix reasonable norms of storage shortages for each depot according to the local conditions.

However, "no norms for storage loss have been fixed by FCI till date and the storage loss was being accounted for on actual basis as the difference between the receipt weight and the issue weight", the report says.

The CAG report also indicts FCI for "irregular disbursement" of Rs 786 crore in 2007-08 meant as the government's incentive bonus to farmers without verifying whether the farmers had actually received the amount.

The money was released to state agencies and rice millers who procured the paddy and were supposed to have paid the bonus to farmers. The government had clearly instructed that the payments should be released only after the state agencies and millers furnished actual proof of payments to the farmers.

"Despite the government's instructions, FCI officials released the payments to the millers and state agencies on the basis of blanket certificates submitted by them without any document evidencing actual payment of bonus to farmers," the report states.

No comparison please:

The CAG audit has found that while neighbouring Haryana has a similar climate the avg loss in the weight of FCI's rice stocks attributed to the loss of moisture is only 0.33% in the state. This works out to less than one- third of the loss that FCI officials in Punjab have been showing.

FCI'S explanation:

There was more procurement in Punjab than in Haryana.

CAG conclusion:

"This reply is not acceptable. Higher procurement doesn't imply a higher percentage of storage loss. Though the climatic conditions in both the regions are similar there is a difference of nearly 200% in the storage loss in the two regions. Misappropriation of stocks cannot be ruled out in high percentage of storage loss."